In an aggressive bidding war with Dish Network (NASDAQ:DISH), Sprint (NYSE:S) has raised its offer for Clearwire to $5 a share, 14% more than Dish’s latest price of $4.4 a share. The new proposal values Clearwire’s business at about $14 billion. Clearwire’s board has endorsed the new terms withdrawing its support for Dish’s offer of $4.40 per share.  The feud for Clearwire is part of an ongoing struggle between Dish and Japanese SoftBank, both of which are seeking to enter the U.S. wireless market. Clearwire’s shareholder vote is once again postponed until July 8. While the outcome of this bidding war is still uncertain, it appears that Dish after giving up its chase for Sprint, is losing its chances on getting Clearwire as well.
Why Is Clearwire So Precious?
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- Why Have Dish Network’s Revenues Increased ~20% While EBITDA Has Decreased ~20% In The Last Five Years?
Clearwire provides services to 88 markets in the United States covering 134 million potential subscribers. It owns rights to radio frequency spectrum in the 2.5 GHz range and provides service primarily using the 4G 802.16e mobile WiMAX standard.  Both Sprint and Dish are hoping to get their hands on Clearwire’s large swath of 2.5GHz wireless spectrum. Softbank, a Japanese carrier looking to set foothold in the growing U.S. wireless industry will acquire Sprint later this year, after fending off Dish in a dramatic set of events. 
It makes sense for Sprint to acquire Clearwire as it has been using its 4G WiMAX to deliver service for several years. Sprint already owns more than 50% of Clearwire and acquiring rest of the stake would simplify its relationship with the wireless carrier. Morever, as Sprint builds its next generation of 4G LTE, it sees value in controlling Clearwire’s entire spectrum. Sprint plans to maintain its niche by keeping its plans for LTE unlimited and the carrier will need more spectrum to meet the ever increasing demands of its data-hungry smartphone subscribers. 
Dish on the other hand is also looking to build a 4G LTE network. The company already owns some spectrum, which the Federal Communications Commission (FCC) has reclassified so that the company can use it to deliver mobile 4G LTE services. Dish sees opportunity in the growing wireless market as the pay-TV business is saturated in the U.S. Dish had earlier bid to acquire Sprint as well as Clearwire, and this reflects well on the part of the company’s strategy. However, last week Dish withdrew its offer to buy Sprint and stated it would focus on Clearwire,  who it expects to provide fixed wireless broadband services. The company is currently testing such a service in rural Virginia using spectrum from various partners. What makes Clearwire a good fit for Dish is that the spectrum the company is using to build this fixed wireless network is in the same 2.5GHz spectrum band that Clearwire uses for its network.
In the triangle between Sprint, Dish and Clearwire, Sprint’s latest bid may put an end to the ongoing saga. Going forward, it would be interesting to see if Dish increases its bid for Clearwire or opts out of the bidding war to pursue a different target or start building its own wireless network.Notes:
- Sprint and Clearwire Agree to Increased Acquisition Offer, Clearwire Press Release, Jun 20, 2013 [↩]
- Clearwire’s SEC Filings [↩]
- SoftBank-Sprint Fend Off Dish Takeover But Clearwire Deal Is A Jump Ball, Trefis, Jun 20, 2013 [↩]
- Sprint Raises Its Clearwire Bid In Final Offer As Bankruptcy Looms, Trefis, May 22, 2013 [↩]
- Dish Folds Its Hand On Sprint But Ups The Ante For Clearwire, Trefis, Jun 19, 2013 [↩]